As a recession looms, some influencer marketing budgets are increasing

Skin-care brand Peace Out used to spend more money running ads on paid channels like Google search and Meta. But these days, as the economy inches toward a possible recession, some of its budget has been reallocated to influencer marketing.

Why? Peace Out CMO Junior Pence told Marketing Brew it’s just more effective. Pence said that when Peace Out promotes influencer content on Instagram and TikTok, it sees a sales bump that’s higher than what it’s seeing across other forms of media.

“You’re basically barely making back what you’re spending in paid media anymore, where influencers are now beginning to generate what paid media was during the pandemic,” Pence explained. Peace Out has increased its influencer budget by about 20% year over year.

As marketers plan for a potential economic downturn, some are funneling more money into influencer marketing, both organically and through “white-listing,” which involves putting ad spend behind influencer content they’d like to promote more widely. It’s a trend that’s already in motion as privacy-related changes and other factors make other forms of media less reliable.

On the up and up

Ali Fazal, Grin’s VP of marketing, told us that increasing spend on influencer marketing during economic downturns has become the norm. “When any sort of recession hits, consumer behavior shifts,” Fazal explained, adding that people may decide to no longer engage with “clickable and shoppable” Instagram ads in an effort to save cash, but they’re not going to unfollow their favorite creators.

“We’re actually seeing brands find a lot of stability in influencer marketing, especially since ad costs have been really turbulent...making it very unclear what you get for your spend in other parts of marketing, whereas the influencer landscape is relatively stable,” Fazal said.

Lindsey Kling, VP of partnerships for baby-care brand Coterie, told us that it’s doubling down on its influencer strategy given the financial climate. Influencer marketing is a particularly high-ROI channel for Coterie, she explained.

The company, which recently partnered with Ashley Graham for a campaign, increased its influencer marketing budget from around $300,000 in 2021 to nearly $500,000 in 2022, according to Kling. Forging longer relationships with influencers rather than one-offs—such as Coterie’s “over a year relationship” with Graham, an investor in the company—helps keep rates down, Kling told us.

Wine brand Yes Way Rosé uses influencers for brand-awareness plays more than direct conversions, founders Erica Blumenthal and Nikki Huganir told us. Even so, Yes Way decided to increase its influencer marketing budget due to a potential recession, pulling back spend on paid advertising with retailers to increase influencer spend by around 15% YoY.

“To be able to connect in an organic way with influencers really can have great results—even more so than our paid Facebook and Instagram ads,” Huganir explained.

Ben Witte, founder and CEO of beverage brand Recess, explained that because Facebook and Instagram ads are now more difficult to measure because of Apple’s iOS 14 changes, influencer marketing seems like the more impactful and creative choice for budget allocation. He said Recess also plans to grow its influencer marketing efforts.

Derek Goode, SVP at agency 160over90, told us the agency has been getting more requests for its influencer marketing services lately. “In addition to getting that audience that they have built in from their following, marketers do tend to lean in on it as an efficient way to achieve a multitude of their marketing goals, as opposed to having to go out, hiring talent, photographers, videographers, location scouts, permitting—all the things you would need to just create even one asset in a more traditional content-creation capacity,” Goode explained.

Crystal ball

At Coterie, Kling expects to continue increasing influencer spend in 2023 as the brand executes new product rollout plans. “I think you’ll actually see us spend a little bit more next year as we continue to grow as a brand, just given how high ROI is for the channel,” she explained.

Yes Way Rosé and Peace Out also predicted that they’ll keep increasing influencer spend in 2023. Perhaps Witte said it best, noting that Recess is “really bullish on the future of that channel.”

Goode told us that he anticipates more money will be funneled into influencer marketing if a recession hits, but said that the briefs will look different, with more focus on “mid- and lower-funnel tactics.” Additionally, he expects that marketers will “really be leaning in on measurement and proving success.”

“In any sort of economic downturn, the goal is not to stop marketing altogether. The goal is to hedge your bets on channels that are stable and successful,” Fazal explained. “Influencer marketing does not have those same peaks and valleys that other digital channels have in a recession. It manages to maintain stability, which I think is going to be like the big proof point when we come out of this.”